Correlation Between Applied Digital and Avricore Health
Can any of the company-specific risk be diversified away by investing in both Applied Digital and Avricore Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Digital and Avricore Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and Avricore Health, you can compare the effects of market volatilities on Applied Digital and Avricore Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Digital with a short position of Avricore Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Avricore Health.
Diversification Opportunities for Applied Digital and Avricore Health
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Avricore is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Avricore Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avricore Health and Applied Digital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Digital are associated (or correlated) with Avricore Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avricore Health has no effect on the direction of Applied Digital i.e., Applied Digital and Avricore Health go up and down completely randomly.
Pair Corralation between Applied Digital and Avricore Health
Given the investment horizon of 90 days Applied Digital is expected to under-perform the Avricore Health. But the stock apears to be less risky and, when comparing its historical volatility, Applied Digital is 2.81 times less risky than Avricore Health. The stock trades about -0.07 of its potential returns per unit of risk. The Avricore Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.97 in Avricore Health on January 12, 2025 and sell it today you would earn a total of 1.22 from holding Avricore Health or generate 61.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Applied Digital vs. Avricore Health
Performance |
| Timeline |
| Applied Digital |
| Avricore Health |
Applied Digital and Avricore Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Digital and Avricore Health
The main advantage of trading using opposite Applied Digital and Avricore Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, Avricore Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Avricore Health will offset losses from the drop in Avricore Health's long position.| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
| Avricore Health vs. Bristol Myers Squibb | Avricore Health vs. Copa Holdings SA | Avricore Health vs. Nokia Corp ADR | Avricore Health vs. Starbucks |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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